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Wells Fargo Lays Off 70 Executives Post Accounts Scandal

Still coping with the effects of fake accounts scandal, Wells Fargo & Company WFC recently disclosed that it is laying off about 70 senior executives, in a memo issued to its employees. The bank took this step to reduce the current management team, per a Bloomberg report.

The executives who have been removed from their positions will remain employees for another 60 days, until the bank decides on the next step.

The remaining executives will be given the title of region bank presidents with the responsibility of more employees under them.

The memo also revealed that the some of the executives have been able to retain their positions due to their interview results, performance, sales quality and tenure. Also, it said that some of the employees who have been laid off have chosen to retire whereas some did not prefer a new job.

After the restructuring, the retail bank will have 12 regional executives as was the case before the scandal. Only one of the executives, David Miree, is new. He is a former executive at Webster Bank.

However, troubles don’t seem to end anytime soon for the bank, as news of Wells Fargo’s involvement in yet another scandal has hit the markets.

On Jul 27, Wells Fargo revealed that more than 500,000 customers have been overcharged for protection against vehicle loss or damage while making monthly loan payments. This led the clients to default on their loans and their vehicles were repossessed.

Thus, the bank will pay up to $80 million to the affected clients, which includes the extra compensation to be given to about 20,000 clients, who lost their cars in the process.

Shares of Wells Fargo dropped about 2.6% on Friday reflecting investors’ reaction to the news.

The bank has consistently taken measures to uplift its reputation since the fake accounts scandal. Also, it has gone through a lot of restructuring lately. However, its involvement in another scandal is likely to offset the related benefits.

Wells Fargo’s shares have lost 3.3% year to date, underperforming the 5.1% growth for the industry it belongs to.

Currently, the stock carries a Zacks Rank #3 (Hold).

Some of the stocks in the financial space worth considering are include JPMorgan Chase & Co. JPM, Hilltop Holding, Inc. HTH and Trustmark Corporation TRMK. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

JPMorgan’s Zacks Consensus Estimate witnessed an upward revision of nearly 2% for current-year earnings, over the past 60 days. Also, its share price has gained 43.1%, over the last one year.

Hilltop Holding’s Zacks Consensus Estimates for the current-year earnings moved nearly 1% upward, over the past 60 days. Its share price has increased 19.1%, over the last one year.

Trustmark’s current-year earnings estimates were revised 1.1% upward, over the past 60 days. Over the last one year, its share price has jumped 22.3%.

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